Can we afford to buy that new product? Replace that machine? Invest in that new technology? Capital planning is the budget created to match a company’s long term plans and investments. As a budget for major expenditures, often the capital plan indicates whether these plans are viable. 

While all are not considered equal, formal capital planning methods include: net present value, modified/internal rate of return, accounting rate of return, payback period, profitability index, equivalent annuity and real options analysis.
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Capital Planning
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